Climate fix divides business leaders

The chief executives of the two ­biggest steel producers in the country have given guarded support for the carbon package, particularly the $300 million assistance package for their industry.

But retailers, miners, airlines and some manufacturers have criticised the proposals as being too great a compliance burden for business and too costly, in part because the starting carbon price is higher than ­international competitors.

The steel assistance package includes a proposal for the government to match dollar-for-dollar investment in lower emission steel. It has been opposed by the Greens and will depend on the Opposition to ­support it in Parliament.

BlueScope Steel
chief executive
Paul O’Malley
said the assistance package would reduce the impact of the carbon price on the struggling sector. “The Steel Transformation Plan [STP] materially reduces the overall cost of the carbon tax on ­BlueScope," he said.

OneSteel
chief executive
Geoff Plummer
said the company had concerns with the original proposals for the carbon scheme but these had been substantially addressed by the steel package. “Our concerns about the adverse impacts of the proposed carbon tax on our competitive position have been recognised and substantially addressed, at least over the four-year life of the STP," he said.

Myer
chief executive
Bernie Brookes
said the department store supported any move to reduce carbon emissions but that it would add to costs and overseas goods would become even more competitive.

“This will add about $3 million to $6 million to our costs," he said. “We will naturally pass those on to consumers. I don’t think there are many retailers that can absorb those costs right now. There is no magic pill to reduce supply chain costs."

James Fazzino
, managing director of Australia’s biggest fertiliser producer and mining explosives manufacturer
Incitec Pivot
, said the government was favouring jobs overseas and asked the government to explain how shifting production to China would lower global carbon emissions.

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“The government is favouring jobs in non-carbon-taxed countries, where our competitors exist, including China and the Middle East, over jobs in Australia," Mr Fazzino said.

“Our jobs are, in the main, in rural and regional Australia, a so-called point of focus for the government."

Business Council of Australia chief executive
Jennifer Westacott
was concerned about added costs to business from the package.

The starting price of $23 a tonne in the fixed-price phase was “well above" the forward international price and more than double that paid in New Zealand, she said.

“New limits on access to inter­national permits, increased ­frequency of reviews, shortened notice periods for any change and the annual reduction of compensation for emissions-intensive, trade­exposed industries will bring additional risks and costs to industry and adversely impact their competitiveness," Ms Westacott said.

Industry assistance will be reviewed in the third year of operation in 2014-15 and at regular intervals after that.

Australian Industry Group chief executive Heather Ridout said the carbon price was too high and should be reduced and assistance for trade­exposed sectors needed to be strengthened.

AGL Energy
chief executive
Michael Fraser
said he still had to work through the detail of the deal.

“But clearly the package has attempted to address a number of key concerns, including risks to the efficient and reliable operation of the electricity market, particularly in Victoria and South Australia."

Airlines
Qantas
and
Virgin
warned they would be hit with higher aviation fuel costs for domestic flights and would pass these on to customers.

Coalminers and mining service companies were critical of the carbon scheme’s impact and assistance. The coal industry receives assistance of $1.3 billion – down from under the Carbon Pollution Reduction Scheme when it was $1.5 billion as well as a $70 million support package.

Anglo American’s metallurgical coal business chief executive
Seamus French
said government assistance for the coal sector was insufficient.

“The government’s assistance package represents less than 10 per cent of the $18 billion carbon tax bill the Australian coal industry faces over the next nine years, compared to the 94.5 per cent the government is providing other trade-exposed industries," Mr French said.

Car maker GM Holden expects to be eligible for assistance under a new set of clean-technology programs aimed mostly at manufacturers, including food processors, not eligible for assistance as an emissions-intensive, trade-exposed industry.

The housing and building sectors warned that costs would increase and jobs could be lost as the industry sought to compete against imports from countries without a carbon price.

“Unfortunately, jobs in Australia’s residential building sector and building product manufacturing sector will be lost under this carbon tax," Housing Industry Association chief executive
Graham Wolfe
said.